RBS and Lloyds close in on Â£500bn Treasury deal

Two of Britain's largest banks have submitted plans to insure almost Â£500bn of assets as part of the Treasury's scheme to kick-start lending and halt the economy's slide towards a full-scale depression.

Gordon Brown, the Prime Minister, and Alistair Darling, the Chancellor, will meet with the Treasury's advisers in Whitehall tonight to hammer out details of the programme, which will involve the creation of a new class of non-voting shares to allow the banks to fund their participation.

Stephen Hester, chief executive of Royal Bank of Scotland (RBS), and Eric Daniels, chief executive of Lloyds Banking Group, are expected to meet with Treasury officials tomorrow to finalise details including pricing and the scale of losses which would be borne by the banks and the taxpayer.

Stephen Hester, the chief executive of Royal Bank of Scotland (RBS), will this week trigger the dismantling of the empire assembled by his predecessor, Sir Fred Goodwin, by announcing plans to create a "non-core" subsidiary into which about Â£300bn of unwanted assets will be placed.